EX-99.1 2 v166178_ex99-1.htm Unassociated Document
Exhibit 99.1
 
Ever-Glory Reports Third Quarter 2009 Financial Results

-- 3Q09 Gross Margin Increased 420 Basis Points YoY to 18.6% --
-- 3Q09 Net Income Increased 200.3% to $1.9 million or $0.14 per diluted share –

Nanjing, China, November 9, 2009 – Ever-Glory International Group, Inc. (the “Company,” “Ever-Glory”) (NYSE Amex: EVK), a leading apparel supply chain manager and retailer in China, today reported its financial results for the third quarter ended September 30, 2009.

During the third quarter 2009, net sales decreased 21.8% to $24.9 million from $31.9 million in the third quarter of 2008. This decrease was primarily attributable to decreased sales orders in the Company’s wholesale business because of the global economic slowdown.

Retail sales from LA GO GO, the Company’s branded retail division, increased to $2.6 million, or 152.8%, compared to $1.0 million in the third quarter of 2008.

"The third quarter of 2009 proved to be a challenging quarter in our wholesale business," commented Mr. Edward Yihua Kang, Chairman of the Board and Chief Executive Officer of Ever-Glory.  “Our wholesale business experienced decreased sales.  The majority of this decrease was due to our decision in the second quarter to halt orders with several customers as we couldn’t be certain of their ability to maintain timely payments thus affecting year over year comparisons for the remainder of 2009.  Our top priority in this difficult economy is to protect Ever-Glory, its financial position and its cash flow.  We believe we are taking the appropriate steps to protect our finances and provide Ever-Glory with a more stable customer base.

“Our retail business remains strong and we recorded over $2.6 million of retail sales in the quarter versus approximately $1.0 million in the third quarter of last year. In the third quarter of 2009, we opened 25 new LA GO GO stores, closed one store and as of September 30, 2009 we had 154 LA GO GO stores in operation in total. Also encouraging is that our retail sales per square foot per month increased approximately 15% compared to the same period of last year.”

In the third quarter of 2009, gross profit increased 0.9% to $4.63 million from $4.59 million in the third quarter of 2008.  Gross margin increased 420 basis points to 18.6% in the third quarter of 2009, compared to 14.4% in the third quarter of 2008 largely because we decreased lower margin orders as a continued effort to pursue higher added value operations in our wholesale business and same store sales increased during the quarter ended September 30, 2009 in our retail business.

Selling expenses increased 94.7% to $1.1 million in the third quarter of 2009 from $564 thousand in the third quarter of 2008.  This increase was primarily due to increased retail staff, renovation and retail marketing expenses to promote LA GO GO.  General and administrative expenses decreased 7.2% to $1.6 million from $1.7 million in the third quarter of 2008. Although we increased payroll for additional management, design and marketing staff as a result of our business expansion, total G&A expenses decreased because non-occurrence of the expenses related to our AMEX listing which occurred in the third quarter of 2008.

Income from operations for the third quarter of 2009 decreased 15.8% to $2.0 million, or 7.9% of total sales, compared to $2.3 million, or 7.3% of sales, in the third quarter of 2008.

Net income for the third quarter of 2009 increased 200.3% to $1.9 million or $0.14 per diluted share from $643 thousand, or $0.05 per diluted share in the third quarter of 2008.

Balance Sheet and Cash Flow
As of September 30, 2009, the Company had $3.6 million of cash and cash equivalents, compared to $1.4 million as of December 31, 2008, Ever-Glory had working capital of approximately $18.5 million as of September 30, 2009. The Company had bank loans of $5.4 million as of September 30, 2009.
 
 
Exhibit 99.1
 
Business Outlook

For full year 2009, the Company anticipates total net sales of $103 million to $118 million and net income of $5.8 million to $6.5 million.  The full year revenue forecast is comprised of $90 million to $100 million in expected wholesale revenue and $13 million to $18 million in expected revenue from retail.

Conference Call

The Company will hold a conference call today at 8:30 a.m. Eastern Time which will be hosted by Edward Yihua Kang, Chairman of the Board, President, and CEO, Yan Guo, Chief Financial Officer. Listeners can access the conference call by dialing #1-913-981-4900. The conference call will also be broadcast live over the Internet and can be accessed at the Company’s web site at the following URL: http://www.everglorygroup.com.

A replay of the call will be available from November 9, 2009 through November 16, 2009 by calling #1-719-457-0820; pin number: 3006456.

About Ever-Glory International Group, Inc.

Based in Nanjing, China, Ever-Glory International Group, Inc. is a leading apparel supply chain manager and retailer in China. Ever-Glory is the first Chinese apparel company listed on the American Stock Exchange (now called NYSE Amex), and has a focus on middle-to-high grade casual wear, outerwear, and sportswear brands. The Company maintains global strategic partnerships in Europe, the United States, Japan and China, conducting business with several well-known brands and retail chain stores. In addition, Ever-Glory operates its own domestic chain of retail stores known as "LA GO GO."

Safe Harbor Statement

Certain statements in this release and other written or oral statements made by or on behalf of the Company are “forward looking statements” within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. The forward looking statements are subject to a number of risks and uncertainties including market acceptance of the Company’s products and projects, the Company’s continued access to capital, currency exchange rate fluctuation and other risks and uncertainties. The actual results the Company achieves may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties. These statements are based on our current expectations and speak only as of the date of such statements. Readers should carefully review the risks and uncertainties described in the Company’s latest Annual Report on Form 10-K and other documents that the Company files from time to time with the U.S. Securities and Exchange Commission.


Contact Information

Company Contact
Ever-Glory International Group, Inc.
Yan Guo
Chief Financial Officer
Tel: +86-25-5209-6222

 
Exhibit 99.1
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)
 
   
Three months ended
    
Nine months ended
  
   
September 30,
    
September 30,
  
   
2009
    
2008
    
2009
  
2008
  
                       
NET SALES
                      
Related parties
  
$
66,221
    
$
17,582
    
$
75,572
  
$
510,145
  
Third parties
    
24,870,500
      
31,867,994
      
66,494,465
    
75,191,036
  
Total net sales
    
24,936,721
      
31,885,576
      
66,570,037
    
75,701,181
  
                               
COST OF SALES
                              
Related parties
    
38,281
      
10,989
      
47,294
    
472,373
  
Third parties
    
20,264,735
      
27,284,216
      
52,667,322
    
62,563,564
  
Total cost of sales
    
20,303,016
      
27,295,205
      
52,714,616
    
63,035,937
  
                               
GROSS PROFIT
    
4,633,705
      
4,590,371
      
13,855,421
    
12,665,244
  
                               
OPERATING EXPENSES
                              
Selling expenses
    
1,097,840
      
563,971
      
2,903,655
    
1,210,063
  
General and administrative expenses
    
1,562,382
      
1,683,713
      
5,707,786
    
4,918,696
  
Total Operating Expenses
    
2,660,222
      
2,247,684
      
8,611,441
    
6,128,759
  
                               
INCOME FROM OPERATIONS
    
1,973,483
      
2,342,687
      
5,243,980
    
6,536,485
  
                               
OTHER INCOME (EXPENSES)
                              
Interest income
    
180,089
      
41,052
      
445,117
    
121,616
  
Interest expense
    
(94,016
)
    
(1,468,592
)
    
(332,900
)
  
(2,677,546
  
Other income
    
269
      
571
      
45,252
    
53,656
  
Total Other Income (Expenses)
    
86,342
      
(1,426,969
)
    
157,469
    
(2,502,274
  
                               
INCOME BEFORE INCOME TAX EXPENSE
    
2,059,825
      
915,718
      
5,401,449
    
4,034,211
  
                               
INCOME TAX EXPENSE
    
(130,479
)
    
(273,203
)
    
(692,206
)
  
(841,850
  
                               
NET INCOME
    
1,929,346
      
642,515
      
4,709,243
    
3,192,361
  
                               
ADD: NET LOSS ATTRIBUTABLE TO THE NONCONTROLING INTEREST
    
7,552
      
4,666
      
25,011
    
1,417
  
                               
NET INCOME ATTRIBUTABLE TO THE COMPANY
  
$
1,936,898
    
$
647,181
    
$
4,734,254
  
$
3,193,778
  
                               
NET INCOME
  
$
1,929,346
    
$
642,515
    
$
4,709,243
  
$
3,192,361
  
                               
Foreign currency translation gain (loss)
    
46,364
      
107,468
      
(36,947
)
  
1,818,706
  
COMPREHENSIVE INCOME
    
1,975,710
      
749,983
      
4,672,296
    
5,011,067
  
                               
COMPREHENSIVE (INCOME) LOSS  ATTRIBUTABLE TO
                              
THE NONCONTROLING INTEREST
    
(6,752
)
    
34,441
      
8,749
    
11,419
  
                               
COMPREHENSIVE INCOME ATTRIBUTABLE TO
                              
THE COMPANY
  
$
1,968,958
    
$
784,424
    
$
4,681,045
  
$
5,022,486
  
                               
NET INCOME PER SHARE
                              
Attributable to the Company's common stockholders
                              
Basic
  
$
0.14
    
$
0.05
    
$
0.35
  
$
0.27
  
Diluted
  
$
0.14
    
$
0.05
    
$
0.35
  
$
0.27
  
Weighted average number of shares outstanding
                              
Basic
    
13,558,326
      
11,914,825
      
13,546,116
    
11,692,604
  
Diluted
    
13,558,326
      
12,002,908
      
13,546,116
    
11,715,332
  
 
 
Exhibit 99.1
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 (UNAUDITED) AND DECEMBER 31, 2008
 
ASSETS
            
 
  
September 30, 2009
    
December 31, 2008
  
   
(unaudited)
        
CURRENT ASSETS
            
Cash and cash equivalents
   $ 3,561,116     $ 1,445,363  
Accounts receivable
     14,590,133       9,485,338  
Inventories
     7,232,455       3,735,227  
Value added tax receivable
     802,120       -  
Other receivables and prepaid expenses
     480,667       945,191  
Advances on inventory purchases
     381,850       288,256  
Amounts due from related party
     10,475,672       11,565,574  
Total Current Assets
     37,524,013       27,464,949  
                 
LAND USE RIGHT, NET
     2,805,175       2,854,508  
PROPERTY AND EQUIPMENT, NET
     12,574,798       12,494,452  
INVESTMENT AT COST
     1,467,000       1,467,000  
TOTAL ASSETS
   $ 54,370,986     $ 44,280,909  
                 
LIABILITIES AND EQUITY
                
                 
CURRENT LIABILITIES
                
Bank loans
   $ 5,398,560     $ 6,542,820  
Loan from related party -short term
     500,000          
Accounts payable
     9,682,539       3,620,543  
Accounts payable and other payables- related parties
     739,437       754,589  
Other payables and accrued liabilities
     1,943,983       1,683,977  
Value added and other taxes payable
     371,655       368,807  
Income tax payable
     118,921       257,946  
Deferred tax liabilities
     304,670       80,009  
Total Current Liabilities
     19,059,765       13,308,691  
                 
LONG-TERM LIABILITIES
                
Loan from related party
     2,247,879       2,660,085  
TOTAL LIABILITIES
     21,307,644       15,968,776  
                 
COMMITMENTS AND CONTINGENCIES
                
                 
EQUITY
                
Stockholders' equity of the Company
                
Preferred stock ($.001 par value, authorized 5,000,000 shares,
                
no shares issued and outstanding)
     -       -  
Common stock ($.001 par value, authorized 50,000,000 shares,
                
13,560,240 and 12,373,567 shares issued and outstanding
                
as of September 30,2009 and December 31, 2008, respectively)
     13,560       12,374  
Additional paid-in capital
     4,592,971       4,549,004  
Retained earnings
     20,541,793       15,807,539  
Statutory reserve
     3,437,379       3,437,379  
Accumulated other comprehensive income
     3,919,913       3,956,860  
Total Stockholders' Equity of the Company
     32,505,616       27,763,156  
Noncontrolling interest
     557,726       548,977  
Total Equity
     33,063,342       28,312,133  
TOTAL LIABILITIES AND EQUITY
   $ 54,370,986     $ 44,280,909  
 
 
Exhibit 99.1
 
EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)
 
   
2009
    
2008
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Net income
   $ 4,709,243     $ 3,192,361  
Adjustments to reconcile net income to cash provided
                
by operating activities:
                
Depreciation and amortization
     1,512,089       714,446  
Deferred income tax
     224,493          
Amortization of discount on convertible notes
             1,934,026  
Amortization of deferred financing costs
             318,196  
Stock issued for interest
             2,155  
Stock-based compensation
     22,181       12,855  
Changes in operating assets and liabilities
                
Accounts receivable
     (5,100,967 )     (3,306,125 )
Accounts receivable - related parties
             153,420  
Inventories
     (3,494,605 )     (597,330 )
Value added tax receivable
     (801,519 )        
Other receivables and prepaid expenses
     (123,094 )     (631,466 )
Other receivable - related parties
             (37,823 )
Advances on inventory purchases
     (93,524 )     (332,988 )
Amounts due from related party
     1,088,634       (4,059,141 )
Accounts payable
     6,057,452       4,325,070  
Accounts payable and other payables - related parties
     72,399       149,688  
Other payables and accrued liabilities
     259,657       435,963  
Value added and other taxes payable
     2,845       181,056  
Income tax payable
     (138,920 )     268,334  
Net cash provided by operating activities
     4,196,364       2,722,697  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Investment in La Chapelle
             (1,397,700 )
Purchase of property and equipment
     (984,346 )     (800,669 )
Proceeds from sale of equipment
     28,537       37,019  
Net cash used in investing activities
     (955,809 )     (2,161,350 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Contribution from minority shareholders
             553,040  
Proceeds from bank loans
     11,991,062       11,354,904  
Repayment of bank loans
     (13,134,464 )     (10,695,402 )
Repayment of long term loan
             (1,844,164 )
Exercise of warrants
             219,635  
Net cash used in financing activities
     (1,143,402 )     (411,987 )
                 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
     18,600       91,449  
                 
NET INCREASE IN CASH AND CASH EQUIVALENTS
     2,115,753       240,809  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     1,445,363       641,739  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $ 3,561,116     $ 882,548  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                
                 
Cash paid during the period for:
                
Interest expense
   $ 245,105     $ 295,562  
Income taxes
   $ 606,622     $ 573,557